Government math, you fact checkers can check this out..
The average clunker got 15.8 mpg and 12,000 miles per year uses 759 gallons a year of gasoline.
The replacement vehicle averaged 24.9 mpg and 12,000 miles per year uses 481 gallons a year.
So, the average clunker transaction will reduce US gasoline consumption by 278 gallons per year.
They claim: 700,000 vehicles - so that's 194,600 million gallons / year.
The average the barrel of oil makes 19.9 gallons of gas
That equates to a bit over 9.778 million barrels of oil.
9.778 million barrels of oil costs 733, 417 million dollars at 75/bbl
So, we all contributed to spending $3 billion to save $733 million a year.
That is from the first post of this thread…
that's how the first poster of this thread calculated 733 million a year in gas savings. i didn't, he did, i just assumed those savings would be for at least 8 years. not 1. he incorrectly stated that it would "break-even" in 5 years. i proved it would not, it would actually earn a profit.
the explination to my reasoning is as follows:
i further proved that 3 billion tax expenditure, would bring tax payers an instant cash flow of 522 million.
that's 800 (conservative estimate of average cash back per car sold, actual figure is debatable but could be as low as 500 or as high as 4500) x 690,000 (approx number of sales under of CARS) = 522 million.
that amount i compounded annually (not monthly) at an annual interest rate of 5%.
The annual savings in gas were estimated above (the first post of the thread). again ESTIMATED, i just used that number because they looked good, and less work for me.
733 million per year establishes an annuity. an annuity is a constant cash amount to be received over a predetermined period. for example, if Fred pays John 5 dollars once a year for 5 years, that is an annuity of 5 payment of 5 dollars, once a year for 5 years.
In portfolio analysis, when you are able to establish a constant savings on activity A, say per month or year, you can treat that savings as an annuity, to determine the possible gains you will have from that available cash, now that it is no longer being spent on activity A. activity A in this case is how much tax payers spent on gas.
I established 8 years to estimate the value of the annuity, because that is the average lifespan of a new car with a given owner. i am ignoring the fact that car will still be in use after 8 years, and producing savings. i also ignore things such as oil prices, possible natural disasters, car accidents, or any other thing that may affect the calculations that cannot be accurately estimated by me at this particular moment in time.
when the numbers are crunched, (this is a summary, look at previous posts for precise calculations) we can see that yes, the tax payer spent 3 billion dollars on the CARS program. BUT, we can also see that expenditure led to an instant return + annuity that will have a future value of 7.3 billion dollars, assuming a 5% interest rate, compounded annually.
When we discount that 7.3 billion dollar amount, at the very same 5 percent annual rate, we find the PRESENT value of the activities started is 5.2 billion dollars.
What this means is that if the tax payer hadn't spent the 3 billion dollars, he would loose out on a 522 million dollar instant return, AND the return from the annuity, thus missing the opportunity to actually gain 2.2 billion dollars. If you still do not understand, google time-value of money and get to reading.
but thinking that most of the people that got the car will be laid off and therefore default is apocalyptic reasoning. The recession is slowing. There is no need to start preparing the panic room.
but if you take into consideration the damage to the economy the bankruptcy of hundreds perhaps thousands of dealers would have done, people jobless, companies having to liquidate inventory at ULTRA low prices, logistics of moving those vehicles to other lots, the damage to real-estate values that a bunch of empty car-lots would've done....
not to mention that dealers and car now have much needed cash no manage the recession. and as much as people scream of compressing demand, and production pull-forwards, and of dead silence in lots because of the government! they do not realize that dealers and automakers were loosing money FAST.
they talk about big economics, but they don't understand the complexities of corporate financial statements, and fail to realize how quickly maturing long-term debt can approach, and just how hard refinancing that debt can be in recessions such as this.......they ignore how many stake holders stand to loose if dealers close and automakers fail. its not just the car salesmen and the owner of the dealership.... there's banks, the dealer's creditors, truck drivers, mechanics that stood to gain from future preventive maintenance, or from reactive maintenance, tire makers, tire distributors, tire installers, electronics suppliers, plant managers, industrial engineers, plant workers, janitors, even (god-forbid) body shop workers stood to gain from the possibility of those brand new cars getting fender benders, and the list goes on and on....
using argument such as that it's the government bailing out those unionized, socialistic, Nazis, compressed demand, Keynes, failure, collapse, blablabla...all words meant to instill fear and worry… and then they keep connecting the dots into an infinite road of insanity…it’s ridiculous….
it's the best 3 billion dollars spent in a LONG time.[FONT="]
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why do I bother.... perhaps ur just not brite enuf....
It's all gibberish with no data to support ur inane positions. Others have noticed it.... I can pull a few comments for you if U wish.... 
